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Loyalty Programs and Privacy Issues: Do You Need to Worry About Providing Personal Information?

Protecting your personal information from online theft has become a major concern in recent years. Here are some practical tips to keep your info safe.

Think your personal information is safe if you join the customer loyalty programs of bigger companies with well-known brand names?


Think again.

The recent data breach at TJX Cos., the owner of the T.J. Maxx, Marshalls, and Home Goods discount retail chains, that may have exposed the credit card data of millions of customers, illustrates why consumers need to limit the number of companies they give information to.

"Even a sophisticated organization like TJX had their computer records hacked and information stolen," said Peter McDermott, an attorney with Banner & Witcoff in Boston who also is chairman of the Business Law section of the Massachusetts Bar Association. "Just because you deal with a reputable organization doesn't mean information won't fall into the wrong hands."

Consumers need to remember that companies use loyalty programs to help them track and understand the kinds of goods and services being purchased so that they can more effectively target their marketing. Signing up for programs such as a store's rewards or discount card may lead to more incoming mail with coupons and solicitations, more telemarketing calls and more spam-type emails, said Susan Grant, vice president for public policy at the National Consumers League, a consumer advocate group in Washington, D.C.

"A lot of times people complain about the junk mail, spam and calls they receive, but they don't think about the fact that when they give their information the result will be more of that," Grant said.

Children and teenagers are particularly vulnerable because they are growing up with access to the Internet, where pop-up ads and sites can easily solicit personal information.

"Younger people tend to be less wary about providing information on websites because they've grown up with sites like myspace.com and they're used to it," said Linda Sherry, a spokesperson for Consumer Action, which is headquartered in San Francisco. "They should definitely read what is being done with the data and find out if there are ways to turn off certain features that will not allow third parties to contact them."

Here are some suggested tips to consider before giving out personal information to a loyalty program:

  1. Before signing up for the program, weigh the value of the discounts against the potential for more solicitations and the possibility that your personal information may be used for other purposes.
  2. Assume that anything you give out will fall into the wrong hands, says McDermott. That will help to remind you to keep track of the information you give. "So if you do see a news article about information being stolen, you should assume your information is stolen and take steps to protect yourself," he said.
  3. If you sign up for a loyalty program, see if the form gives you the option to opt out of solicitations.
  4. Read the privacy policy on the forms. In general, "you might want to limit the amount of information that is collected and stored about you in various databases," Grant said. "They could be subject to a subpoena or used for a purpose that you might not have anticipated."
  5. Find out whether the information is going to be resold to a third party or just used by the organization with whom you're signing up. "If they reserve the right to share something, they're probably selling it," Sherry said.

When it comes to the Internet:

  1. Talk to your kids. And when it comes to access to the Internet, warn them to be even more cautious than ordinary common sense. "For example, kids are prone to responding positively to pop-up ads and they need to know that even if it's legitimate, it's the same issue of providing information," McDermott said.
  2. Be aware of the Children's Online Privacy Protection Act of 1998 that requires websites used by, or directed to, kids under the age of 13 to post a clear, online security policy describing the information to be collected and the collection methods. Parents should be able to contact the sites, and have to give their consent to the release of any information. "Parents need to be looking over the shoulder of kids under 13," McDermott said.

About the Author:
Christine Dunn is a freelance writer and founder of Savoir Media Co., a media training and consulting firm in Massachusetts. She worked for more than a decade at Bloomberg News, and currently also regularly contributes to Compliance Week.

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